By Octavio Corona
A Masters Degree Graduate of Tsinghua University (China) with over 15 years of experience in the Chinese Market and a deep understanding of Chinese Business, Octavio Corona shares with us his own recipe for success to successfully find suppliers in China.
In China “Suitable” involves “Reliable” by definition.
How can we get a suitable Chinese Supplier? This question has been in the air for more than a decade and, without any doubt, whoever has the universal answer to this question is definitely going to hit the world’s supply chain jackpot and be positioned as the real China guru of the 21st century!
Quite a simple question! Unfortunately, the answer is not that simple. The facts show that such answer has plenty of variables on both sides; and in China some facts are hidden under suppositions. Those suppositions must be set as variables in the whole equation. However, buyers do not see the whole variables as they are often focused on the three main ones, which are price, quality of goods and of service and the delivery of goods.
The price, which is usually under the motto of the lower the better, as everyone wants to continuously reduce costs. The quality of the products and of the service is translated into “the higher, the better” of the standard. The delivery of goods on time, or dare to say just in time; as nowadays is known as the ideal time at any strategy for supply chain.
As for the hidden facts, the first fact and probably the most important one, is that in China we do not come to purchase from a supplier, but to develop a provider and then, to purchase from him. Not having acknowledged this fact is definitely going to cost us our savings on finding out why things are not getting on as they ought to.
The second important fact is that buyers, most of the times, do not put time and money into the work of a private investigator. I certainly believe it is necessary to have a private investigator in order to identify if the supplier is reliable and if it is free of any legal dispute or has a production, financial and/or quality problem that might lead to a bad performance in the profit/loss graphic of the business.
Having this information, the original question still stands: How can we get a suitable Chinese Supplier? As there is not absolute answer, it is necessary to define that suitability will depend on how a particular buyer wants or is able to evaluate the supplier. How he is going to answer to his/her requirements based on all of the above mentioned factors, plus the feeling on the supplier’s personal impression. Such evaluation will be, basically, based upon the research done under the following method. This method that I had commonly use and that had given me good results, so far.
What to do on the seeking process of Chinese suppliers?
I insist, there is no universal formula! Here is what I do when I am checking on new providers that are not on my database. Actually, there are two derivates from the original method. The original method should be called a good budget method and the other are just when either oneself or the customer are “on a budget” situation:
A Good Budget Method consists on the following steps:
a) Check the supplier on the Internet
b) Analyze the information
c) Make some phone calls
d) Request for documents and samples from the supplier
e) Make a visit the factory or sites.
f) Make a due diligence to the supplier
g) Go the extra mile and request an official certificate.
A Budget Method consists on the following steps:
a) Check the supplier on the Internet
b) Analyze the information
c) Make some phone calls
d) Request for documents and samples from the supplier
Usually, when a customer requires a certificate of the factory, the last three steps are a must, however, some customers are also “on a budget”, but still wish a due diligence of the factory. In this case, then all the above steps are done with the exception of the extra step, which is an official certificate from the Chinese Government as it becomes expensive and takes longer to obtain it. Comparatively, the other steps are quick and simple once one has some expertise on the field.
Moreover, a new question arises. What about when I already have the suppliers on the database? Or even better, how is that database acquired or gathered?
It is simple. It requires time and effort to create and organize a reliable supplier’s database platform. Let me share what I do at my company. First, we go to as many fairs and exhibitions as possible to gather all the information from providers. Second we do a follow-up on the ones we are interested and meet them, either personally on site or at their facilities. We have full time employees doing these tasks and every serious company on the market should do the same in order to get their own platform.
A trustworthy platform usually takes about one to three years to be created. It all depends on the intended use of it. Also, some companies want to have their platform as internal information and others want to make a profit of it.
Suggestions
China is a complicated business environment and even when all precautions are taken into account on the playground; there is always the risk of slipping down at any moment. Still, from my insight, the key to be successful in China, rest in that no matter how much money, skills and/or connections you have, it is the time and effort you apply into this market what will make your success. The longer you spend here, the less risk you will face on slipping down. Many people do not have enough time to spend in China so they seek shortcuts. Therefore, I suggest them to get closer to other people, organizations and/or companies that already have paid their school fees in this country and market. Otherwise, if the buyer wants to go solo, will most probably face losses by meeting red tape and great walls at all times with nothing to do but wonder what went wrong?, and that is, unfortunately, a sad common practice. In other words, get an expert, do not try to play being a hero in Apache land or you will most likely be scalped.
For further information please contact: ocorona@assiamex.com
